Battery life – after safety measurement
Selling only vehicles with the lowest performance satisfaction
Establishment of a performance evaluation center in the metropolitan area
After experiencing a used car for a month, purchase and introduce a ‘subscription service’ program
Kia has come up with a plan to operate a certified used car business specialized in used electric vehicle trading and used car subscription service. There is also a program in which users can experience a used car for up to a month before making a purchase decision.
Kia announced on the 18th a specific certified used car business plan to sell only its own branded vehicles ‘5 years after purchase and mileage of 100,000 km or less’. Certified used cars are the same concept that imported car brands are doing in the domestic market. Kia plans to handle only vehicles that have passed the detailed inspection, interior and exterior improvement, and quality certification inspection of more than 200 items. Reliability is a key keyword.
Kia presented a direction to revitalize the market by increasing the transaction reliability of used electric vehicles. Hyundai Motor Group sold 71,785 pure electric vehicles in the domestic market last year. In the first quarter of this year (January to March), it sold 22,768 units. As the spread of electric vehicles accelerates, second-hand transactions are also active. The transaction volume of used electric vehicles last year was 12,960 units, up 63.0% from 7949 units in 2020.
For used electric vehicles, objective performance evaluation or pricing standards are more ambiguous compared to internal combustion engine vehicles. Moreover, the proportion of transactions between individuals accounted for 64.3%. Transactions between individuals are more likely to cause disputes in the future than business transactions.
Kia plans to establish a system that can estimate the objective value of used electric vehicles. After measuring the remaining lifespan and safety of batteries, which account for half of the vehicle price, the company plans to sell only vehicles that meet the minimum performance standards in the future. To this end, Kia decided to develop a quality inspection and certification system exclusively for electric vehicles.
Another notable plan is the ‘Reconditioning Center’ (tentative name), a facility for certified used cars that will be built first in the metropolitan area. It is a facility that will diagnose the performance of used cars and be in charge of commercialization and quality certification. According to Kia, a workshop dedicated to electric vehicles and an organization dedicated to commercialization will also be located here.
A used car subscription service is also introduced. The subscription service ‘Kia Flex’, which is currently operated only with new cars, inspects the vehicles returned after the contract is over and puts them back into the subscription service. Subscription service users can choose between new and used cars in the future. By subscribing to a used car, the cost is relatively low and there is no need to wait for shipment.
Kia plans to limit its market share to 1.9% this year, 2.6% in 2023, and 3.7% in 2024 to coexist with the used car industry. As Hyundai Motor sets an upper limit for market share of 5.1% in 2024, the share of the two companies will not exceed 9% in 2024.
Previously, the Ministry of SMEs and Startups did not designate the used car sales business as a suitable business for a livelihood by the deliberation committee of the subsistence type industry, thus opening the way for large corporations to enter the used car market. However, as the used car industry applies for business adjustment to the Ministry of SMEs and Startups, there is still a fight over the scope and volume of the business. Kia said, “After the government’s business adjustment results are out, we will further materialize our business plans and win-win plans.”
Reporter Lee Kun-hyuk [email protected]